GG Posted August 23, 2008 Share Posted August 23, 2008 You've got an iPhone? Might as well just wear a sign that says "I'm a douche". As should anyone with a cellphone that does more than just dial. Link to comment Share on other sites More sharing options...
In-A-Gadda-Levitre Posted August 23, 2008 Author Share Posted August 23, 2008 Linkage Four years after California's disastrous experiment with energy deregulation, Enron energy traders can be heard – on audiotapes obtained by CBS News – gloating and praising each other as they helped bring on, and cash-in on, the Western power crisis. "He just f---s California," says one Enron employee. "He steals money from California to the tune of about a million." "Will you rephrase that?" asks a second employee. "OK, he, um, he arbitrages the California market to the tune of a million bucks or two a day," replies the first. The tapes, from Enron's West Coast trading desk, also confirm what CBS reported years ago: that in secret deals with power producers, traders deliberately drove up prices by ordering power plants shut down. "If you took down the steamer, how long would it take to get it back up?" an Enron worker is heard saying. "Oh, it's not something you want to just be turning on and off every hour. Let's put it that way," another says. "Well, why don't you just go ahead and shut her down." ______________________________________ "This is the evidence we've all been waiting for. This proves they manipulated the market," said Eric Christensen, a spokesman for the utility. That utility, like many others, is trying to get its money back from Enron. "They're f------g taking all the money back from you guys?" complains an Enron employee on the tapes. "All the money you guys stole from those poor grandmothers in California?" "Yeah, grandma Millie, man" "Yeah, now she wants her f------g money back for all the power you've charged right up, jammed right up her a------ for f------g $250 a megawatt hour." wow, I had no clue it was this blatant Link to comment Share on other sites More sharing options...
In-A-Gadda-Levitre Posted August 23, 2008 Author Share Posted August 23, 2008 Ok then, take this to its logical conclusion. If speculators never intend to take delivery, wouldn't you think the unfortunate Exxons would avoid the futures markets to squeeze the speculators at the expiration of the contract? After all, someone has to be on the other side of the trade that always goes up in price. Why in the world would actual users of oil participate in the futures market when they know it's dominated by speculators who have zero capacity to take delivery. If I'm the poor little guy at Exxon looking for a break, I'd wager a bet on the spot market thinking that perhaps the evil trader at Goldman will have to dump his contract right before expiration because 85 Broad Street doesn't have a big oil tank in the basement. I never really looked into the connection between the big oil companies and the futures, but it seems to me that companies like Exxon deal directly with the petroleum producers; either through strategic partnerships or direct purchases, since they buy so much. The commodities markets are more for airlines, or other huge consumers like trucking companies that hedge future prices. Link to comment Share on other sites More sharing options...
GG Posted August 23, 2008 Share Posted August 23, 2008 I never really looked into the connection between the big oil companies and the futures, but it seems to me that companies like Exxon deal directly with the petroleum producers; either through strategic partnerships or direct purchases, since they buy so much. The commodities markets are more for airlines, or other huge consumers like trucking companies that hedge future prices. Uhm, what is United Airlines going to do with a barrel of oil? Link to comment Share on other sites More sharing options...
In-A-Gadda-Levitre Posted August 23, 2008 Author Share Posted August 23, 2008 Why is what happening? It's been acknowledged that financial speculators may impacted the price of oil by maybe 10% or so. I guess you can say that the trading curbs had a part in this months decline, but at the end of the day the price still mostly reflects the supply demand fundamentals. Just like Enron traders didn't create CA's energy problem they just made it worse. Even without Enron, CA would have been screwed because of limited electricity supply lines. Stating that it's limited to 10% depends on who you believe. There are very knowledgeable people on both sides that say it's everything from $30-40 a barrel to next to nothing. Link to comment Share on other sites More sharing options...
DC Tom Posted August 23, 2008 Share Posted August 23, 2008 You've got an iPhone? Might as well just wear a sign that says "I'm a douche". He does. It's called an iPhone. Link to comment Share on other sites More sharing options...
Chef Jim Posted August 23, 2008 Share Posted August 23, 2008 I didn't, but the damn iphone did. Wow....19 minutes. I was just picking up the phone to dial 911. An no, it's not an iPhone. Link to comment Share on other sites More sharing options...
In-A-Gadda-Levitre Posted August 23, 2008 Author Share Posted August 23, 2008 Uhm, what is United Airlines going to do with a barrel of oil? airlines are some of the largest traders on the oil futures market. Here's an explanation from FT The commodity markets perform a crucial function in our economy. They serve as a place where producers and consumers of specific commodities can enter into futures contracts that help hedge the risks of price fluctuations common to their industries, thus creating some measure of price predictability for their businesses. But these real, physical commodity market traders – airlines, refineries, manufacturers and other users and producers of energy – actually intend to produce or take delivery of those commodities and have historically been the main participants in these markets. Jet Fuel only recently started to appear on futures markets, it's always been oil that the airlines hedged. Link to comment Share on other sites More sharing options...
Steely Dan Posted August 23, 2008 Share Posted August 23, 2008 Why is what happening? It's been acknowledged that financial speculators may impacted the price of oil by maybe 10% or so. I guess you can say that the trading curbs had a part in this months decline, but at the end of the day the price still mostly reflects the supply demand fundamentals. Just like Enron traders didn't create CA's energy problem they just made it worse. Even without Enron, CA would have been screwed because of limited electricity supply lines. The tapes, from Enron's West Coast trading desk, also confirm what CBS reported years ago: that in secret deals with power producers, traders deliberately drove up prices by ordering power plants shut down. "If you took down the steamer, how long would it take to get it back up?" an Enron worker is heard saying. "Oh, it's not something you want to just be turning on and off every hour. Let's put it that way," another says. "Well, why don't you just go ahead and shut her down." Link to comment Share on other sites More sharing options...
ExiledInIllinois Posted August 23, 2008 Share Posted August 23, 2008 The tapes, from Enron's West Coast trading desk, also confirm what CBS reported years ago: that in secret deals with power producers, traders deliberately drove up prices by ordering power plants shut down."If you took down the steamer, how long would it take to get it back up?" an Enron worker is heard saying. "Oh, it's not something you want to just be turning on and off every hour. Let's put it that way," another says. "Well, why don't you just go ahead and shut her down." Really apples and oranges... But, look at what I do... There is a reason why the federal gov't DIRECTLY controls the inland waterways... Like the locks and dams... Just imagine if certain transportation companies managed them? And back in history that is exactly what happened... One can look no further than the lucrative and important coal areas of Kentucky and WV and their transportation system. Link to comment Share on other sites More sharing options...
Pine Barrens Mafia Posted August 23, 2008 Share Posted August 23, 2008 As should anyone with a cellphone that does more than just dial. And you're in BUSINESS? Shame on you, man. BLACKBERRY. Link to comment Share on other sites More sharing options...
Steely Dan Posted August 23, 2008 Share Posted August 23, 2008 Really apples and oranges... But, look at what I do... There is a reason why the federal gov't DIRECTLY controls the inland waterways... Like the locks and dams... Just imagine if certain transportation companies managed them? And back in history that is exactly what happened... One can look no further than the lucrative and important coal areas of Kentucky and WV and their transportation system. How do we know all the refinery's are running at peak capacity? Link to comment Share on other sites More sharing options...
ExiledInIllinois Posted August 24, 2008 Share Posted August 24, 2008 How do we know all the refinery's are running at peak capacity? So they say. So are most of the locks and dams on the Upper Mississippi and Illinois... Ever get a 1200' x 105' tow (15 barges) into a 600'x110' chamber? Guess how you do that: You put the first half in and then winch them out with a cable and go back for the others. Link to comment Share on other sites More sharing options...
Fan in Chicago Posted August 25, 2008 Share Posted August 25, 2008 How do we know all the refinery's are running at peak capacity? They aren't: Refinery Utilization See the line " Percent Operable Utilization" Link to comment Share on other sites More sharing options...
GG Posted August 25, 2008 Share Posted August 25, 2008 airlines are some of the largest traders on the oil futures market. Here's an explanation from FT Jet Fuel only recently started to appear on futures markets, it's always been oil that the airlines hedged. If you're going to submit something into evidence, usually it's helpful to try to get an objective view rather than an op-ed by politicians touting proposed legislation. Your "evidence" still doesn't contradict the point that airlines have no us for oil. They use oil futures contracts to hedge fuel costs, because oil is a close proxy to fuel (not always). But at the end of the contract, they don't want to take delivery and wouldn't be able to squeeze out speculators in the spot market, because in effect they are financial speculators as well. Link to comment Share on other sites More sharing options...
GG Posted August 25, 2008 Share Posted August 25, 2008 The tapes, from Enron's West Coast trading desk, also confirm what CBS reported years ago: that in secret deals with power producers, traders deliberately drove up prices by ordering power plants shut down."If you took down the steamer, how long would it take to get it back up?" an Enron worker is heard saying. "Oh, it's not something you want to just be turning on and off every hour. Let's put it that way," another says. "Well, why don't you just go ahead and shut her down." The only thing that the emails prove is that traders in general are arrogant, egotistical chest bumping a-holes riding adrenaline laden testosterone waves. So, frigging what? If their actions were as illegal as you imply, wouldn't you think that some of the traders would be serving real jail time? I mean if some mid level accountant at Dynergy got twenty years for misclassifying an accounting entry, you'd think that the trader miscreants would get life for their relative misbehavior in the highest profile corporate wrongdoing investigation in our lifetime. But all they got was a few years' probation for dirty talk. Link to comment Share on other sites More sharing options...
In-A-Gadda-Levitre Posted August 25, 2008 Author Share Posted August 25, 2008 If you're going to submit something into evidence, usually it's helpful to try to get an objective view rather than an op-ed by politicians touting proposed legislation. Your "evidence" still doesn't contradict the point that airlines have no us for oil. They use oil futures contracts to hedge fuel costs, because oil is a close proxy to fuel (not always). But at the end of the contract, they don't want to take delivery and wouldn't be able to squeeze out speculators in the spot market, because in effect they are financial speculators as well. I did a quick search for a web page that explained why airlines might want to hedge oil prices and that showed they were major traders. This is not some opinion of mine. Airlines invest heavily in oil futures and take delivery, partnering with refiners to lock in fuel prices. It's well understood by anyone that follows the oil futures market. Don't believe me, it doesn't freaking matter. Look it up. Link to comment Share on other sites More sharing options...
DC Tom Posted August 25, 2008 Share Posted August 25, 2008 I guess I don't really understand the difference between Enron owning the vast majority of contracts and power or several companies with the same agenda controlling 81% of the market. It still seems the same to me. Enron was the market. They created it, they were basically the only player (at best, the largest by a massive margin). Using monopoly power to manipulate a market is different from several "companies" (and it may not be companies, it may be individuals) speculating. And, as GG said...what the traders themselves did and said wasn't necessarily illegal. Slimy as hell...but they were buying and selling a commodity on the open market. That the "open" market wasn't really open (like I said, Enron was the market), and that the market rules allowed them to create completely artificial levels of supply and demand isn't really the individual traders' fault. Though personally...I would have RICO'd their asses. Link to comment Share on other sites More sharing options...
GG Posted August 27, 2008 Share Posted August 27, 2008 I did a quick search for a web page that explained why airlines might want to hedge oil prices and that showed they were major traders. This is not some opinion of mine. Airlines invest heavily in oil futures and take delivery, partnering with refiners to lock in fuel prices. It's well understood by anyone that follows the oil futures market. Don't believe me, it doesn't freaking matter. Look it up. Which supports my argument. Airlines need refiners to take physical delivery. So, if they have the side deals with the refiners (how legal is that?) why aren't they squeezing the financial speculators at the expiration of the futures contract. If speculators represent over 75% of the futures market, but have no desire to take actual delivery, would you imagine that savvy commercial players would wipe out the speculators by simply staying out of the futures markets? Link to comment Share on other sites More sharing options...
In-A-Gadda-Levitre Posted August 27, 2008 Author Share Posted August 27, 2008 Which supports my argument. Airlines need refiners to take physical delivery. So, if they have the side deals with the refiners (how legal is that?) why aren't they squeezing the financial speculators at the expiration of the futures contract. If speculators represent over 75% of the futures market, but have no desire to take actual delivery, would you imagine that savvy commercial players would wipe out the speculators by simply staying out of the futures markets? I don't know enough to say at what point the speculators opt out and sell. Expiration is death, so they will do whatever they have to avoid it. Simplistically seems like they would just sell early. The side deal you speak of a legal business contract to refine 'n' barrels of crude into Jet A, possibly delivering to their hubs (Shell could do this...). Everything is totally legal and above board. The difference is they always intended to take delivery vs the speculator who never intends to. You are absolutely right, taking the only customers out would kill their the speculator's business, but I imagine United, American and Delta would rather use their resources to inform Congress and various regulatory agencies about the realities of the market (as they see it of course), and have those groups investigate, make the necessary legal changes, all that. If you buy into the argument that speculators have a significant part of the price of oil, then it's not a leap of faith to think Congress and CFTC, NYMEX, etc. are incented to move quickly, since that would have a sizable change in the price of gas, a lot faster than drilling new wells (I'm not against this!) or other medium-to-long term investments would. Link to comment Share on other sites More sharing options...
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